Answer to Question #54391 in Microeconomics for anu
Assume that there are four firms supplying a homogenous product. They have identical cost functions given by C (Q) = 40 Q. If the demand curve for the industry is given by µ = 100 – Q, find the equilibrium industry output if the producers are Cournot competitors. What would be the resultant market price? What are the profits of each firm?
If the firms have identical cost functions given by C (Q) = 40 Q, so every firm produce the quantity, for which MR = MC. MC = C' = 40 MR = TR' = (P*Q)' = ((100 - Q)*Q)' = 100 - 2Q So, 100 - 2Q = 40, Q = 30 So, the equilibrium industry output if the producers are Cournot competitors is 30*4 = 120 units. The market price is P = 100 - 30 = $70. Total profits of each firm are: TP = TR - TC = P*Q - TC = 70*30 - 40*30 = $900.
I think I'm satisfied. I didn't really understand the last 2 projects you completed for me so i don't know if they were missing anything. I will note that the first 4 projects did contain small errors or did not incorporate all the instructions but these were easy fixes and helped with my learning experience. i will use your service again if the need ever arises.